Usury is lending at an interest rate that exceeds the limit imposed by the law governing the loan. In the United States, there is no single ceiling for every loan: the applicable rules can depend on the borrower’s jurisdiction, the lender, the type of credit, and the contract terms.
What usury means
Usury is a legal classification, not simply another word for an expensive or unfair loan. The question is whether the interest rate or relevant charges exceed the limit under the law that applies to that particular transaction. A rate may be high without being legally usurious, and the legal limit can vary by lender and product.
U.S. law can involve both federal and state rules. The Truth in Lending Act generally leaves state laws governing permissible credit rates and charges in place except where they are inconsistent with federal law. It does not establish one usury ceiling for every loan. The Federal Reserve’s Truth in Lending Act text describes that relationship.
Why there is no single U.S. usury rate
The controlling limit may depend on the state whose law governs the loan, the lender’s legal status and location, and the kind of loan involved. Some lender categories have specific federal rules that affect which state limits apply. For example, the Office of the Comptroller of the Currency’s handbook describes 12 U.S.C. § 85 as governing maximum interest rates for national banks on most types of loans, generally tying rates to those allowed by states where the bank is located, subject to statutory qualifications. That handbook passage has been rescinded and incorporated into another handbook booklet under OCC Bulletin 2026-29, so it should not be treated as current supervisory guidance; check the current handbook and controlling law for a specific issue. OCC handbook passage.
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State law is also not interchangeable from one state to another. Texas, for example, has interest-limit provisions in its statutes, but those provisions do not establish the rule for borrowers or lenders elsewhere. Texas Constitution and Statutes.
APR is not the same as a usury limit
APR, or annual percentage rate, is a measure of the cost of credit expressed as a yearly rate. Regulation Z defines it by relating the amount and timing of value a consumer receives to the amount and timing of payments made. CFPB Regulation Z, § 1026.22.
APR can help compare credit offers, but it does not by itself determine whether a loan is usurious. The legal test depends on the governing law and how that law treats the transaction’s interest and charges. The CFPB’s Regulation Z commentary recognizes that an applicable maximum rate may be a legal limit, such as a state usury cap, and says the creditor must disclose when the maximum rate is determined by applicable law. CFPB commentary on § 1026.47.
Fees and contract terms can matter
Do not assess a loan from its advertised interest rate alone. Depending on the governing rules, fees or other charges may count toward interest for usury purposes. OCC guidance describes several fee categories treated as interest in the national-bank framework; other laws may treat charges differently. Variable-rate terms and default charges can also affect what the borrower may owe and how the contract is analyzed.
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How to check whether a particular loan may be usurious
A general rate chart cannot settle every case. Gather the transaction details, identify the controlling law, and compare the relevant charges with that law’s limit and remedies:
- Identify the transaction. Note the borrower’s jurisdiction, the lender’s legal type and location, the loan product, and the date the loan was made.
- Read the agreement. Find the stated interest rate, any variable-rate formula, fees, and default charges.
- Determine which laws apply. Check the relevant federal and state rules, including any treatment specific to the lender or loan product.
- Check how charges are counted. Find out whether the applicable law treats particular fees as interest; do not assume rules for one lender category apply to another.
- Compare against the legal limit and remedies. Use the controlling statute or consult a qualified lawyer if you are assessing a live dispute. Remedies depend on the applicable law.
This checklist is educational and does not determine whether any individual loan violates the law.
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